iAd poised to take 21% of market as Google loses share to Apple

Apple's new iAd mobile advertising service is poised to take 21 percent of the U.S. mobile advertising market by the end of 2010, giving the company a market share tied with Google and three times larger than Microsoft.

According to estimates from IDC provided toBusinessWeek, Google, Microsoft and Yahoo have "swiftly lost share" since Apple's iAd debuted in July. By the end of the year, IDC expects Apple and Google to each carry a 21 percent share of the market, which would be a decrease for Google's 27 percent share last year.

Microsoft is expected to see its market share drop as well, from 10 percent last year to 7 percent this year. And Yahoo is projected to drop from 12 percent to 9 percent by the end of 2010, while Nokia will see it share drop from 5 percent to 2 percent.

IDC's figures showing Apple's almost instant success in the mobile advertising market are not, however, as great as the ambitious expectations for iAd shared by CEO Steve Jobs earlier this year. In June, Jobs said iAd would take nearly a 50 percent share of mobile ads in the second half of 2010.

Advertisers who spoke with BusinessWeekreiterated their satisfaction with the performance of iAds. A spokesman for Unilever, which debuted an advertisement for Dove in July, said more than 20 percent of users to view an ad check it out a second time.

A spokesman for Google said the search giant was "experiencing fast growth" this year, though the company declined to give its mobile ad sales for the full year. "If we are losing share, this market is growing faster than any one we've ever seen," said Jason Spero, director of mobile for the Americas at Google.

iAds aim to provide richly interactive ad experiences inside developers' apps, providing them a 60 percent cut of the advertising revenue. The hope is the advertisements —noted by the iAd logo in the corner —will be more compelling to users, because they don't have to leave their app and launch a browser to view them.

iAd advertisements act more like full-blown applications, complete with features like videos, interactive games, and the ability to find information such as local stores or product availability.

The iAd platform will expand in November to the iPad, when Apple launches iOS 4.2. Support for iAds was first introduced with iOS 4, released for the iPhone and iPod touch this summer.

Apple plans to use iAd as a program to incentivize App Store development, and does not expect to turn a great profit from its new advertising business, made possible due to the purchase of Quattro Wireless for $275 million.